This is a blog by a former CEO of a large Boston hospital to share thoughts about negotiation theory and practice, leadership training and mentoring, and teaching.

Thursday, December 20, 2012

New for 2013: The Pain Index

A recent report by the New York Times contained an excellent graphic showing the current percentage of uninsured people in each state. The range is from a high of 24.6% in Texas to a low of 4.4% in Massachusetts.

I have combined this rate with the most recently reported CDC rate of obesity in each state to create what I call The Pain Index. It is a simple sum of the two numbers.

The theory behind the total is that obesity is a rough guide for the level of unhealthiness in the population. My hypothesis is that, when insurance is made available to people, they will use it, roughly in proportion to the degree they are unhealthy.

Yes, I know this is a crude metric, but I think it will be a relatively good predictor of the rate of increase in health care costs in each state over the coming years. This will show up in the insurance premium rates offered in the health care exchanges and will also affect the need for state appropriations to pay for newly eligible Medicaid subscribers.

States with a Pain Index in the top decile are: Texas, South Carolina, Lousiana, Mississippi, and Arkansas. Others with scores over 45 are Nevada, Florida, New Mexico, Georgia, Alaska, Oklahoma, North Carolina, Kentucky, Alabama, and West Virginia.

My advice to policy-makers: Get ready! My advice to health care CEOs: This would be a really good time to focus on quality, safety, and front-line driven process improvement as the most effective way to reduce your costs and improve efficiency.

Why then does MA have the highest healthcare spending per capita in the U.S.? I think it has more to do with the large number of high cost academic medical centers and the market power of the Partners Health System allowing them to command far higher prices per service, test or procedure than their competitors. Neither is about to change anytime soon.